Adaptation, Anticipation and Apprehension

Adaptation, Anticipation and Apprehension

Oil prices have returned to pre-war levels. The market expects the price of Dubai crude to remain between $60-70 US/barrel through to the end of the decade. The rosier oil picture lowers medium term inflation risk and reinforces our call: hold the OCR and give the economy breathing room. Read more about our call in our mid-year outlook note. [https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/commentary-insights/a-stormy-sea-makes-a-skilled-sailor/] We're cautiously optimistic that AI will enhance New Zealand's productivity, rather than replacing our jobs as Economists. We remain keenly interested in its impact on crowding out, regulatory lag, and competition. Hosted by Jarrod Kerr, Alexandra Turcu and Elliott Lowe. Follow our economic commentary & insights here. [https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/] Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.

AI is booming and Oil is dooming

We look back in time (one week) and so much has changed. We almost had a peace deal to celebrate. Oil prices dropped on hopes the deal would hold. As always, we speculate on the next move in markets, given the uncertain territory we have to navigate. The first quarter of the year and the GDP results which printed higher than expected. A stronger starting point for the year means that the demand destruction we've been feeling this quarter might set us back without completely derailing the Kiwi economy. Data points to the AI investment boom as a driver of growth domestically. We make many convincing arguments as to why we (economists) can't be replaced by AI (yet). None more salient than interpreting the future of oil distribution from the Middle East and its impact on where prices are going next. Hosted by Jarrod Kerr and Alexandra Turcu. Follow our economic commentary & insights here [https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/]. Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.

We talk interest rates, with a hawk

The Reserve Bank’s official cash rate is meant to help keep the Kiwi economy stable. We talk about the optimal cash rate and make some calls with Kiwibank Rates Trader, Graham Hughes. International rates have an impact on the Kiwi through currency moves. Rates differentials between NZ and Aussie are no exception. A move higher in Kiwi rates at a time when the Aussies have finished hiking could drive moves the NZD/AUD cross. On one point we agree with a hawkish Graham, rate hikes will have to be part of the RBNZ story in the future. The question is how soon? And how high should rates go? Hosted by Jarrod Kerr and Alexandra Turcu. Follow our economic commentary & insights here [https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/]. Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.

Housing Peaks, Plateaus and a Growing Gap

We have some market mayhem to discuss, the US payroll data printed higher than expected, sending the S&P500 down 2% in a single day. We talk about the Fed and the RBNZ and much more. The AI bubble is still propping up the US share markets, but a lot of funding is being syphoned out of other areas to feed the AI machine. When will we actually see the efficiencies and profits boom off the back of this investment? Back home we have a widening gap in house prices between the North and South. We have the Central Otago and the Lakes districts where asking prices are more than 20% higher than a year ago. While the rest of the market tracks sideways. Hosted by Jarrod Kerr and Alexandra Turcu. Follow our economic commentary & insights here [https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/]. Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.

Rate hikes and budget cuts. More pain, less gain.

A big week of information to reflect on. The OCR and the Budget 2026 both out last week. Neither extremely surprising, but both giving us (and markets) plenty to digest. We dive into the forecasting scenarios of the RBNZ and Treasury. One side is too pessimistic, the other too optimistic. We feel like Goldilocks trying to find the one that’s just right. Uncertainty is still the word of the day – probably the year. An oil crisis that just doesn’t want to end, coming in an election year, and unpredictable weather events to top it all off. Hosted by Jarrod Kerr and Alexandra Turcu. Follow our economic commentary & insights here [https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/]. Any views or information shared in this podcast, while given in good faith, aren't necessarily the view of Kiwibank.